The three top stocks in the S&P 500 are all chipmakers.
Advanced Micro Devices, Lam Research and KLA have all raced ahead of the pack this year, climbing by at least three times the S&P 500's gains. The broader SMH semiconductor ETF is also on a tear, looking to close out its best year since 2003.
Mark Newton, founder of Newton Advisors, warns that the group could be getting overheated.
"It looks very much like we're going to see mean reversion in 2020. This group has gotten way ahead of itself in a big way," Newton said on CNBC's "Trading Nation" on Monday.
Charts of the group's top performer -- Advanced Micro Devices -- makes a solid case for a major pullback, Newton says.
"If you look at commonly looked-at indicators like the relative strength index, it's back up over 70 on a monthly basis. That's very much a concern. Last time you saw that, of course, is both 2014 and also the early part of 2018. Both those times coincide with periods of underperformance going forward," said Newton.
Any reading above 70 on the RSI, a momentum measure, typically suggests overbought conditions.
"You look at the SOX semiconductor index, very similar. RSI right now over 70. You know my thinking is it's right to really take the foot off the accelerator and think that this group starts to stall as we enter the month of January," said Newton.
Nancy Tengler, chief investment officer at Laffer Tengler Investments, says a few companies in the group still look good.
"We missed Lam Research and I would be interested in that stock on a pullback. But, looking forward, we are investing in sort of the staid diversified names like Texas Instruments, Broadcom, even Intel has been attractive to us — dividend growth, yield alternative in this sort of market that has a dearth of yield," Tengler said during the same segment.
Texas Instruments has outperformed the S&P 500, but Broadcom and Intel have lagged. All offer a dividend yield above the S&P 500 — Broadcom has the highest at 4.1%.
Disclosure: Laffer Tengler Investments and Tengler have positions in Texas Instruments, Broadcom and Intel.